The IPPR warned the hit to VAT receipts from Reform UK’s pub proposals would be far greater than claimed – and accused Nigel Farage’s party of getting its numbers wrong
Nigel Farage’s tax cutting claims to save pubs have been blasted by an expert.
The Reform UK leader this week announced a £3billion support package for pubs, funded by restoring the two-child benefit cap, if his party wins power. It included halving VAT on the hospitality sector from 20% to 10%. Reform UK claimed the move will save the industry £1.7billion a year and, by reducing prices, boost demand.
Other measures announced included scrapping the employer national insurance increase for hospitality businesses, cutting beer duty by 10%, and abolishing business rates for all pubs.
Reform said the package would be paid for by reinstating the two child limit on Universal Credit to save, it claimed, approximately £3billion by 2029/30. Mr Farage said: “What is happening to our pubs, what is happening to our hospitality sector, is little short of a disaster. They’re on the edge of falling off a cliff. It’s very, very serious.”
But the IPPR think tank accused the party of getting its numbers wrong, claiming the actual loss of VAT would be more like £5.6billion. Its calculations are based on the fact that government statistics show that net VAT receipts from the hospitality sector were £11.7billion last year.
READ MORE: Nigel Farage accused of planning to plunge half a million children into poverty with pubs pledge
Professor Ashwin Kumar, director of research and policy at IPPR, and a former advisor to Gordon Brown, said: “The government was right to scrap the two-child limit, a policy which would have trapped half a million children in poverty by the end of the decade.
“Hospitality needs help, but this shouldn’t be paid for off the backs of some of the poorest in society who need this support so their children can thrive.
“This is also not a fiscally neutral plan as is claimed. The costs of halving VAT alone would be much more than the claimed £3billion saving from reinstating the two-child limit. In reality, this is an unfunded tax cut which someone will have to pay for.”
It comes after Labour announced its own package of measures to help pubs by reducing April’s a threatened hike in business rates by 15%, and freezing them for the next two years. However, critics say the support do not go far enough given a surge in other costs and changing customer habits, fuelled in part by the price of a pint.